Hibbett Sports Downgraded: Stay Out of This Game

Hibbett Sports (HIBB) was downgraded today by TheStreet Quant Ratings, which provides fair and objective information to help you make educated investing decisions. I look at the upgrades and downgrades every day and combine that piece of information with the charts and indicators.

As I have said many times in this space, no one investment approach is 100% perfect, 100% right. Combining approaches can yield better results in the long run, in my opinion.

Let's check the charts and indicators on Hibbett Sports.

In this daily bar chart of HIBB, above, we can see prices have shrunk to around $10 from $45 in November. Ouch. Prices have been below the declining 50-day moving average line since January and the 200-day line turned bearish in February. There is a bearish dead cross of these two averages in early February.

The On-Balance-Volume (OBV) line is easier to read and understand than a volume histogram and the OBV line has been weak the entire time. In the lower panel is a bullish divergence from July to August as momentum makes a higher low when prices make lower lows. Because the trend has been down so long, this small divergence may not deliver much of a rebound.

In this weekly chart of HIBB, above, we can see a top pattern in 2012 to 2014 above $50. Prices peaked in early 2014 and are retesting the lows of 2008. No support around. Prices are below the declining 40-week moving average line. The weekly OBV line has been declining since early 2014 and tells us that sellers of HIBB have been more aggressive for years. The momentum study shows prices are extended on the downside, but that is not a reason to buy it.

Bottom line: Prices are low and may be cheap, but the short-term and long-term trends are down. I would look for HIBB to trade between $15 on the upside (nearby resistance) and $5 on the downside with a downward bias.

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However, please note that our Quant Ratings service assesses stocks using a proprietary computer model that runs a variety of factors through quantitative and technical analysis. Ratings do not necessarily reflect the opinions of Jim Cramer or other columnists, who may use different criteria to grade stocks. 

This column originally appeared at 12:55 p.m. ET today on Real Money, our premium site for active traders. Click here to get great columns like this from Bruce Kamich, Jim Cramer and other writers even earlier in the trading day.

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